MARKET NEWS 08/04/2021

Good morning

We all love going on a shopping spree but consider Bob van Dijk, Naspers CEO, who was already sitting on $4.5bn in cash and who yesterday sold 2% of their Tencent stake for $14.7bn in the world’s biggest single share block trade ever. So with close to a $20bn war chest one wonders what Bob is going to buy!!! 

These are the mid rates as at 7:35 today:

USD = R14.55

AUD = R11.09

GBP = R20.01

DXY = 92.34

EUR = R17.27

Brent Crude = $62.99 per barrel

Market News

• After posting successive daily gains the Rand gave up some ground yesterday but fortunately this backwards step was muted. We opened at R14.52 to the Dollar and after testing R14.50 once again, a level that has held strong for some time, we then slipped to R14.59 late on before settling at R14.55.  
• While local headlines have supported the Rand we have also been helped by a falling Dollar this week but unfortunately the Dollar enjoyed a small bounce yesterday sending us to R14.59. Curiously, the catalyst for Dollar strength was the latest FED minutes which re-affirmed their stance on keeping US monetary policy ultra-loose until their targets of full employment and average inflation of 2% have been met and this would typically be Dollar negative, but yesterday the market went the other way. Perhaps this was thanks to the minutes also acknowledging that the US economy has already enjoyed substantial gains which was a nod to their recovery outperformance when compared to other developed nations.  
• The following is from Reuters and suggests that the Dollar Index may pause around current levels thanks to their well-publicised economic rebound being priced in, but that further strength could lie ahead which is bad news for the Rand:  “Hard to argue that the US macro outperformance trade is exhausted; the strong vaccine drive, reopening and stimulus set to produce some exceptionally strong rebound data in the next several months,” Westpac strategists wrote in a report, forecasting a run at 94.5 for the Dollar Index, also known as DXY. “Admittedly though, the next DXY up leg may take a few weeks before it develops momentum as a lot of good news is priced in.”
• We also lost ground against the Euro yesterday thanks to better than expected market data showing that business activity in the Eurozone bouncing back into growth over March. But the theme across most financial news outlets is that Europe’s bungling of their vaccine rollout will count against the Euro, especially as we are seeing rising COVID cases across the bloc as well as strict lockdown measures remaining in place. The Rand touched R17.19 to the Euro this week which is the best level since the 4th of March 2020, and with the Euro under pressure further gains for the Rand are likely.  
• Locally our market data came in softer than expected yesterday which would not have helped the Rand’s cause. Our services PMI for March was forecast to increase from 50.2 to 50.6 but only managed to hit 50.3, and then our SACCI Business Confidence Index was forecast to improve from 94.5 to 94.7 but fell to 94.0. Today we get February’s manufacturing production stats and this is expected to disappoint which could weigh on the Rand.  
• Local market data today sees our Feb manufacturing stats at 1pm.   
• Possible USD mid rate trading ranges in the Rand today are R14.40 and R14.70.